Innovations in the eCommerce Consumer Journey (Part 1) – The gritty origin story

Writer’s Note: The following is the first in a trilogy on the past, present, and future of eCommerce consumer journeys.

Figure 1: An advertisement of the Electronic Mall from the mid-1980s

We live in an era where the meteoric rise of a new technology, turning from contrived indulgence to indispensable utility in a matter of years, doesn’t astonish us anymore. One of the success stories of these exciting times is eCommerce. It has grown from a few million dollars in the early 90s to a stratospheric 1.9 trillion dollars in 2016. This journey has seen its share of ups and downs, and the lessons learned are reflected in the current wave of innovations in the industry. Before we get to those, let’s look at how we’ve reached where we are today…

Before 1995 – In Silos

The first eCommerce store, incidentally, preceded the invention of the World Wide Web. CompuServe, an Internet Service Provider, opened the Electronic Mall in April 1984. The first credit card transaction in eCommerce was made on Compumarket in 1989. The first browser accessible eCommerce website, Books.com, was launched in 1992.

The Internet’s early years, though, were a polarizing time in Retail boardrooms. Traditionalists were unwilling to tinker with their business models, refined over half a century of dominance, to synergize with the internet. Modernists argued that the online shopping was the next big leap, and they all needed to get on the Internet bandwagon while the front seat is still available. The result of this tug of war was along expected lines – the consensus reached was to invest judicially and strategically in eCommerce website solutions.

Thus, eCommerce began its journey tentatively in a small silo, working silently in the towering shadow of the retail industry. Books and CD/DVD companies were the first movers, consumer goods stayed at arm’s length. Future industry leaders Amazon (as a bookstore) and eBay (then called “AuctionWeb”) were founded in 1995. A groundswell was slowly rising.

1995-2001 – The Growth and the Bubble

Figure 2: Early versions of Amazon and eBay websites

The late 90s were when internet adoption began to rapidly gain momentum. Total internet users worldwide grew from 16mn in 1995 to 513mn in 2001, with internet penetration growing from 0.4% to 8.6%. Global footprint rose with Alibaba (China), ECPlaza (S. Korea), IndiaMart (India) being launched. The US had many ecommerce firsts in this phase –

First luxury brand (Victoria’s Secret)

First Video Rental Service (Netflix)

First large B2C retailer (Walmart)

First large wholesale B2B retailer (Costco)

First large ticket sale/resale portal (StubHub)

Some of the pioneering technologies, functionalities and service providers, which are now integral to the eCommerce consumer journey were also launched in this phase –

Payment system Confinity was founded in 1998 and merged with Elon Musk’s X.com to form PayPal in 2000

Amazon launched its 1-click purchase service in 1999

DoubleClick, the first major online Advertising agency, was launched in 1999

While the seeds of long-term growth were being sown, a bubble was also beginning to form. eBay founders become instant billionaires, as shares rose from $18 to $53.50 on the first day of going public. US Stock Market Index NASDAQ grew by over 1000% in 1995-2000. After peaking around mid-2000, the slide began when Tech companies like Dell and Cisco sold a huge number of their stocks and triggered panic selling. High valuation companies like Pets.com and eToys.com went bankrupt, company valuations all came back to pre-bubble levels. But all was not lost.

2001-2008 – Consolidation and Course Correction

Figure 3: A poster announcing the launch of iTunes (2003)

In hindsight, this bubble a blessing in disguise. Various companies with unsustainable business models like 30min Grocery Delivery (Webvan.com), 100% rebate (CyberRebate), broadband internet only websites (Boo.com) were weeded out.

This was the phase when people focused on strengthening their core business offering. Huge acquisitions like eBay buying PayPal and StubHub, Amazon buying Mobipocket were made to consolidate category advantages and take greater control of the whole customer journey.

Some of the major e-commerce innovations which have revolutionized it today were germinated in this phase –

Subscription Commerce – Amazon prime was launched in 2006. Though mainly focused on priority delivery, their model of engagement, loyalty, and customer messaging would later be adapted by subscription services like Dollar Shave Club for suit niche markets

Digital Downloads and Video Streaming – iTunes was the first eCommerce store for digital downloads of music and videos. After the launch of YouTube, Netflix (streaming), there was a further shift from download to streaming

Supplementary Video Content – The culture of DIY googling was cementing itself, and YouTube added the highly potent medium of videos to it. Customer-Centric Brands and Retailers started creating and syndicating DIY and tech support content, differentiating themselves from competition in non-price terms.

Then came the next disruptor, a little thing called the iPhone, and the next step of evolution was upon us. This is what I’ve covered in the next part of the series.